Dealing with the bank, how much you should save for a down payment and looking for the right home can leave your head spinning if the process is brand new to you. There is so much information out there that it’s hard to know what to follow. Buying a home is, arguably, the biggest purchase you’ll make in your lifetime. Many mistakes are bound to be made if you don’t know the house buying process.

With a purchase this large, making a mistake could cost you a lot of money. Making the right moves from the beginning can avoid issues in the future. Avoiding these mistakes can be simple, if you know what actions can easily resolve them.

  1. How much can you afford? This may seem like an obvious question with an obvious answer, but you would be surprised. Many people shop for a home then get a loan instead of the other way around. This can lead to you wasting your time if the loan you are approved for is substantially less than the amount needed to cover the house. Shopping around for a loan first is the most beneficial step you can take. You will know exactly how much you can set aside for the down payment, an emergency fund and what you’ll need to make a comfortable payment. For your first home, it may be a good idea to grasp an idea of how much money you’ll receive and need to make this house your home.
  2. Is your down payment too small? There’s an idea that has been floating around that states you must put down 20 percent to buy a home. This is not true. Some loans can allow you to buy a home with zero percent down. The difference is what your payments will be. A smaller down payment means you’ll have a higher monthly fee. Figuring out how much to save is purely a judgement call but knowing how a smaller monthly fee can help you later when you’re juggling house repairs and other bills is an important thing to factor. A 20 percent down payment could also help you avoid paying Primary Mortgage Insurance (PMI). This insurance is added to your monthly payment if your down payment is lower than 20 percent. PMI will remain on your monthly payment until you’ve reached 20 percent. There’s a lot to consider when figuring out your down payment, but many wish they would have waited until they had a bigger payment. For many people, the monthly payments turned out to be too much to handle with all the bills that are needed.
  3. Are you emptying your savings to buy? When buying a first home, most are not buying something brand new. Repairs will need to be done and you’ll be the one footing the bill. Without an emergency fund to fall back on, you’ll be left in debt. To avoid this, you must look to the future. With the down payment, closing costs, moving expense and the repairs that will pop out of nowhere, your bank account can quickly be drained. If you shop around ahead of time and know an estimate of what the costs of all those aspects may be, you can be better prepared for when the expenses appear.

When looking into buying your first home, it’s important that your finances are in order. Jumping into something without having the funds to support it can lead to trouble. Shopping around for loans and making sure you have the money to cover the whole process can save you a lot of time and energy in the future. Buying a home for the first time is a challenging but worthwhile experience. Make sure you’re prepared for it all.